Despite India’s fintech infrastructure growing by leaps and bounds, credit and financing for the SMB sector continues to remain a major bottleneck. The category is marred by several roadblocks that SMBs find hard to navigate. However, several up and coming startups have found lucrative business opportunities in the same. This has further already caught the eye of global tech giants such as Amazon and Facebook (now Meta), and now, Google has joined the party.
Google marked its entry into the sector by becoming the latest investor in corporate financing startup Progcap, which is known to provide working capital to SMBs in the country.
It joined Progcap as the business-to-business (B2B) lending platform scooped up $40 million in an extension of its Series C funding round, led by its existing investors Creation Investments, Tiger Global Management, and Sequoia Capital India and South-East Asia.
The total value of the Series C funding round amounts to $70 million – including the $30 million it raised in the first tranche of the C round in September 2021. This round also tripled the valuation of the five-year-old Progcap to $600 million – it was last valued at $200 million. It has raised over $100 million in funding so far.
With India positioning itself as one of its key markets, it is hardly surprising that Google is broadening its push into the domestic market. At the beginning of the year, it was announced that it would be pouring millions of dollars – up to $1 billion – into India’s telecom major Bharti Airtel as part of its Google for India Digitization Fund.
Some of its other major investments in Indian companies include putting in $4.5 billion in Reliance Industries’ Jio Platforms for a stake of 7.7% and investing $145 million in Bengaluru-based InMobi’s mobile-first content platform Glance. It also teamed up with Jio to develop and roll out JioPhone Next, touted to be the most affordable smartphone.
Going forward, the New Delhi-based Progcap will deploy freshly raised capital to fuel expansion in new markets and boost the development of its app and products as it intends to enter newer categories such as serving businesses in electrical and electronics and lending for manufacturing. It will also explore opportunities for acquisitions.
Progcap seems to be a good choice for an investment. Founded in 2017 by Shrivastava and Himanshu Chandra, the startup currently provides collateral-free working capital to over 700,000 SMBs. It claims to have about $1 billion to retailers in the past four years alone.
Progcap also claims to have recorded annualized disbursals of $1 billion in FY22, something that is growing by four times year-on-year. Going forward, it aims to become a full-stack retailer-focused digital bank that digitizes, automates, and eases capital movement across the supply chain to SMBs. It also looks to become operationally profitable in the coming months.